*Formerly the Hayley MailThe Fixed Income Leaders Summit in the beautiful city of Amsterdamthis year played host to some fiery debates among the buy-side.

Dutch courage

Now by no means is my headline of ‘Dutch courage’
suggesting anyone was under the
influence of any alcoholic beverages during their panels, more that
the canal-heavy location seemed to
bring out the confrontational side
of participants.

Having long-been a topic of debate
amongst fixed income market participants, it would appear the argument about a decline in bond liquidity continues to rage. Regulators
worldwide have rejected claims, up
until quite recently, that liquidity in
fixed income has deteriorated since
the financial crisis in 2008.

Lee Sanders, head of fixed income trading at AXA Investment
Management, however, told delegates he has no problem sourcing
liquidity and the use of tools like
the MarketAxess Open Trading
platform has made the task easier.

He went so far as to say the buy-side have in fact become lazy whenit comes to seeking out liquidity.

Jim Switzer, global head of credit
trading at Alliance Bernstein,
countered this and claimed dealer
balance sheets and a shift towards
passive investing have led to an exacerbation of liquidity. “I disagree
that liquidity today is the best it
has ever been, it’s ok, but step back
and look at the market before the
financial crisis in 2008. If liquidity
is fine, then why aren’t bid offer
spreads higher? We have to keep
talking about liquidity in bond
markets,” Switzer said.

Data was another hot topic at theFixed Income Leaders Summit thisyear. Panellists raised questionsabout whether the buy-side will bewell equipped to have an edge overlarge banks to become key playersin fixed income markets. GlobalJames, also endorsed the hiringof data scientists to sit alongsidetraders on the desk. He told dele-gates the Pictet team recently hiredtwo data scientists with no tradingbackground to make use of theever-mounting data that asset man-agers have seen over recent years.

MiFID II of course, did not fail
to get a mention at the conference.
Rather than debating the requirements of the new regulation, senior
market participants looked at the
costs. They agreed complying with
new legislation has created a less
competitive environment for asset
managers and it has led to the rise
of the ‘defensive merger’. We’ve
seen rather recently the creation of
powerhouses boasting billions of
assets under management. Stacked
against these firms are the smaller
asset managers who, panellists
agreed, will need to look for more
creative ways to fight off growing
costs often seen through compliance technology and a squeeze on
profits.